Start-ups grapple with Instagram’s new business models

Over the past decade, Instagram has created a new kind of entrepreneur. Anyone can create a page and post photos for free, giving Founders access to over a billion potential customers. And during the pandemic, the platform has been essential in helping some small businesses survive.

“[Instagram] was my lifeline, ”said Catherine Sharman, managing director and founder of the UK company After food. She had to close her restaurant on lockdown, but kept the business afloat by shifting towards delivering healthy ready meals, which she posted on Instagram.

Jamie Lester, who founded a consulting firm specializing in selling new homes, says traditional selling methods, including online real estate portals, are no longer attracting the volume of buyers needed to reach and sell. For the latest project he helped market, he took to social media, primarily Facebook and Instagram. “About 70% of buyers were from social media,” he says. “As a business, we need it. ”

Overall, one in three UK businesses choose to grow their business on Facebook or Instagram, due to the ease and potential for growth, according to the Advertising Association’s Advertising Country 2019 report.

And the founders saw their peers become millionaires. Makeup artist Huda Kattan, for example, started a blog and gained millions of Instagram followers. In 2013, she launched her own line of cosmetics and now has a net worth of $ 490 million, according to Forbes.

In June, Adam Mosseri, head of Instagram, said it was “no longer a photo-sharing app.” As the company competes with other social media channels like YouTube and TikTok, Mosseri said it will prioritize helping creators “make a living,” as well as video, messaging. private and electronic commerce.

Just before Mosseri’s announcement, the app’s business tools had been updated to include a purchasing tab for users, which includes a customizable storefront that allows viewers to purchase directly from company profiles. either through the app or by logging into a corporate website.

These are welcome developments, but the recently updated Instagram ad setup also means large businesses can increase their visibility through paid advertising. Companies promote existing posts for a small fee to reach a larger audience – a promoted post – or create a new post to use as an advertisement, known as a sponsored post. These give more reach, which in turn allows for preferential treatment from the artificial intelligence fueling the application’s algorithms.

Not all small businesses can afford it and the changes have had a tangible effect on Instagram sales traffic and engagement, according to Ruth Prada and Sam Bokma, founders of Trippy Tuesday, a small company that makes candles. and jewelry in forms that are “normative” and reflect what real people look like. When they started the business almost two years ago, Instagram accounted for over 90% of the traffic to their online store. They reached their audience by simply posting articles about their products and the story behind them.

“In the beginning, we weren’t doing paid marketing on Instagram because we were reposted by people with millions of followers. We were contacted by Miley Cyrus who found the candles at random, ”says Bokma, noting that their launch collection sold out within 24 hours.

Today, however, Instagram only accounts for 70% of their sales traffic, their posts have grown from “thousands” of likes to just “hundreds” and subscribers have peaked at around 19,000.

Jennifer Poust, social media and marketing manager for skincare brand Suneeta London, noted similar algorithm-induced declines. “The reach is terrible,” she said. You can’t grow a new business on Instagram now without investing a lot of money in it when you could grow organically.

And Instagram’s emphasis on video is adding to the pressure. “You just don’t know if someone is reading the messages [any more]because the emphasis is on video, ”explains Poust.

There’s also a problem with ads – and even entire accounts – mistakenly deleted for violating Instagram guidelines, something small businesses can hardly afford. For example, Trippy Tuesday set up an Instagram store for their products, which was rejected by the app’s censorship rules because their candles mimic a naked body.

Poust says Suneeta was “banned for three days” for participating in a small business trend where pages promote and follow each other. “At that time, we had no advertising going. . .[Instagram]messaged us saying, “You are not allowed to use third-party apps to gain subscribers,” assuming that because we weren’t paying them, it didn’t make sense for us to get new subscribers. “

Podcast Work This

An illustration of our Working It image, a collage of two workers standing on a laptop with a Working it sticky note in the foreground

Whether you’re the boss, the assistant, or on your way, we are changing the way the world works. This is the podcast on working differently.

Join host Isabel Berwick every Wednesday for expert analysis and a discussion of water coolers on the leading trends in the workplace, the big ideas shaping today’s work – and old habits that we must give up.

Customer support to resolve the issue was also lacking, according to Poust. It was almost impossible to reach a person because the communication between the companies and the platform is done via “online forms”, she specifies.

Meanwhile, brands with less than 10,000 subscribers are “penalized,” says Sharman of Après Food, because they cannot have full access to all of Instagram’s business features until they reach this step.

In response, Instagram says that “small businesses are the heart of Facebook and Instagram”. The company adds that it has put business tools “in the hands of millions of entrepreneurs. . . in the world that were previously only available to larger companies ”. It indicates that more than 200 million businesses around the world use its services every month.

Many entrepreneurs still highly value Instagram as a platform, especially its informal nature and the fact that they can market in a way that is not “pushy” and can stay close to their customers. They are not leaving anytime soon.
Instagram is “hub” and “fab,” it just needs to be fairer, Sharman says. Likewise, the founders of Trippy Tuesday like to post artistic images instead of TikTok-style videos. “Instagram can be its own thing. . . and that doesn’t need to change, ”says Bokma.

Comments are closed.